Understanding Share Secured Loans: A Simple Guide
Imagine you have some money saved up, and you need a loan. Instead of looking for other types of loans, you can use your savings as a guarantee for a Share Secured Loan at Your Legacy Federal Credit Union. It’s like telling the credit union, “I have this money here, let me use it as a promise that I’ll pay back my loan.” This way, you get to enjoy some great benefits.
Taking out a Share Secured Loan can be a strategic move for those looking to build or improve their credit score. When you take out this type of loan and make timely payments, it demonstrates to credit bureaus that you’re a responsible borrower. Each on-time payment is reported to the credit bureaus, contributing positively to your credit history. Over time, this can help increase your credit score. It’s a win-win situation: you get the loan you need, possibly at a better rate, and you get the opportunity to strengthen your credit profile. Just remember, the key is to make consistent, on-time payments, as late payments can negatively impact your credit score. By using a Share Secured Loan as a credit-building tool, you’re essentially using your own money to help establish a stronger financial future.
So, here’s how it works, the interest rate on a Share Secured Loan is often lower than what you’d find with other loans, which means you save money over time. Plus, the fees are usually less too. And the cool part: as you pay off your loan, the amount of your savings that the credit union needs to hold onto gets smaller. So, if you borrowed $1,000 and you’ve paid back $500, the credit union only needs to ‘freeze’ $500 of your savings now.
If you have more money saved than you need to borrow, this type of loan can be a smart choice to keep some extra cash in your pocket. The rates are pretty straightforward – for a loan secured by your savings account, it’s 2.00% over the annual rate of your account. If it’s secured by a Share Certificate, which is like a fixed deposit, it’s 2.00% over that rate, but the loan term can’t be longer than the time left on the certificate.
These rates are current as of September 12, 2024, and they depend on your credit history. If you’re curious or ready to explore this option, just shoot an email to loans@yourlegacyfcu.com. They’ll help you figure out if this is the right move for you. So, there you have it – a Share Secured Loan could be your ticket to borrowing smartly, using what you already have.